CPKC Drives Ceremonial Final Spike, Joining Three NationsWritten by Railway Age Staff
Canadian Pacific Kansas City (CPKC) on April 14 became the first single-line, transnational railway connecting Canada, the U.S. and Mexico, marked by a ceremonial Final Spike driving in Kansas City, Mo.
The new transnational railroad also broke ground on a new yard office, the future location of its U.S. operations center.
The merger of Class I railroads Canadian Pacific (CP) and Kansas City Southern (KCS) to form CPKC was authorized by the Surface Transportation Board (STB) on March 15. With its global headquarters in Calgary, Alta., Canada, CPKC describes itself as “the only railway connecting North America and has unrivaled port access on coasts around the continent, from Vancouver to Atlantic Canada to the Gulf of Mexico to Lázaro Cárdenas on Mexico’s Pacific coast.” The smallest of the now six U.S. Class I railroads by revenue, the newly combined company operates approximately 20,000 miles of rail and employs close to 20,000 people, and is expected to be fully integrated over the next three years.
Keith Creel, formerly CP President and CEO, is now President and CEO of CPKC. Pat Ottensmeyer, previously KCS President and CEO, will continue as an advisor to Creel through the remainder of 2023 “to ensure continuity on key initiatives predominantly involving the combined company and Mexico.” Both are former Railway Age Railroaders of the Year, sharing the honor in 2022 and independently honored in 2021 (Creel) and 2020 (Ottensmeyer). Subject to final appointment by the CPKC Board of Directors is the 11-member executive leadership team, all reporting to Creel.
“Today, we celebrate this historic combination creating a truly unique single-line rail network that begins a new chapter of railroad history in North America,” Keith Creel said. “As we mark this once-in-a-lifetime occasion by driving the Final Spike in Kansas City, Mo., where CP and KCS come together, we stand ready to bring new competition into the North American rail industry at a time when our supply chains have never needed it more.
“This unmatched CPKC network will give our customers new options and expanded reach to more markets as we provide reliable rail service, take trucks off public roads and raise the bar on rail safety by expanding CP’s industry-leading safety practices. The public, environmental, competitive and safety benefits of this historic combination are extraordinary for our railroaders, communities, rail customers and the North American economy.
“We stand ready to move the commerce of today and ready to compete hard to grow tomorrow. With the most relevant railroad network on the continent, we’ll create value for all stakeholders, bringing new jobs, economic growth and environmental benefits to workers, customers and communities.”
KCS on April 14 reported on LinkedIn: “Today, Kansas City Southern and Canadian Pacific combine to become CPKC! As we embark on this exciting new chapter, we would like to thank all our employees, customers and communities who have been a part of our incredible journey. For nearly 140 years, we have proudly been at the heart of transportation supply chains in the United States and Mexico. We are excited to continue to offer unparalleled services and shipper benefits across our expanded network as CPKC … Join us as we make history connecting a continent!”
CP completed its US$31 billion acquisition of KCS on Dec. 14, 2021. Immediately upon the closing, shares of KCS were placed into a voting trust, ensuring that KCS operated independently of CP during the regulatory review process. Pursuant to the STB’s March 15 decision approving the transaction, the voting trustee, Ronald L. Batory, on April 14 transferred the KCS shares to an affiliate of CP, formally bringing KCS into the CPKC family.
CPKC reported filing articles of amendment changing the company’s name to “Canadian Pacific Kansas City Limited,” which became effective April 14. CPKC’s common shares will remain listed on the Toronto Stock Exchange (TSX) and New York Stock Exchange (NYSE) under the ticker symbol “CP” and are expected to begin trading under the new name and new CUSIP (13646K108) on April 18. Each existing share certificate reflecting the former name of the company will continue to represent a valid certificate until such certificate is transferred, re-registered or otherwise exchanged, according to CPKC.
CPKC said its combination of CP and KCS will offer the following benefits:
- “CP’s culture of safety, supported by its history of sustained investments in core infrastructure and technology, aligns with KCS’s like-minded culture, allowing the combined system to operate at the apex of rail safety,” CPKC said. “CP has been the safest railroad in North America for 17 straight years, as measured by the Federal Railroad Administration (FRA)-reportable train accident frequency ratio. In 2022, CP had an all-time best frequency of 0.93, a rate nearly half what the company produced a decade ago and 69% lower than the Class I average.”
- CPKC plans capital investments of more than US$275 million over the next three years “to improve rail safety and the capacity of the core north-south CPKC main line between the U.S. Upper Midwest and Louisiana.”
- CPKC reported that its anticipated environmental benefits include “the avoidance of more than 1.6 million tons of greenhouse gas (GHG) emissions due to the anticipated improved operational efficiency of CPKC versus current operations and another 300,000 tons of GHG emissions with the diversion of 64,000 trucks to rail for a total reduction of 1.9 million tons of GHG emissions over the next five years.” The new Class I said that diverting 64,000 long-haul truck shipments to rail annually with new CPKC intermodal services will reduce total truck vehicle miles traveled by almost 2 billion miles over the next two decades, saving US$750 million in highway maintenance costs.
- CPKC will also support the expansion of Amtrak and other passenger services on the CPKC network.
Also on April 14, CPKC announced the appointment of four new Directors to the Board of Canadian Pacific Railway Company, a wholly owned subsidiary of CPKC, effective immediately. Following the terms of the merger agreement, four KCS Directors join the Board of the combined company. They are:
- David Garza-Santos. A KCS Director since 2016, he is a business and community leader in Monterrey, N.L. Mexico, who CPKC said “is providing insight and leadership on the business and political environment across Mexico.” He has been chairman and CEO of Maquinaria Diesel SA de CV (MADISA) since 1994.
- Ambassador Antonio Garza (Ret.). A KCS Director since 2010, he is currently counsel to the law firm of White & Case in Mexico City. “He brings strong diplomatic, legal and international business skills to the board developed through his experience as an attorney, and as United States’ Ambassador to Mexico (2002-2009),” CPKC said. A native Texan, Garza formerly served as Chairman of Texas’ Railroad Commission, Texas’ 99th Secretary of State and Cameron County Judge.
- Henry Maier. A KCS director since 2017, he has spent his career working in various segments of the transportation industry. According to CPKC, Maier has “developed a deep skill set in strategy development and execution.” He served as President and CEO of FedEx Ground, a subsidiary of FedEx Corp., until his retirement in 2021.
- Janet Kennedy. First appointed a KCS Director in 2017, she brings extensive executive leadership experience in business development, strategy, emerging technologies and technological transformation. Kennedy served as Vice President, North America Regions, Google Cloud at Google, and previously held senior leadership positions at Ernst & Young and Microsoft Corp., including as President of Microsoft Canada.
“The addition of these members brings to the board a wide range of professional experience in transportation and logistics across the United States and Mexico,” CPKC Board Chair Isabelle Courville said. “We are delighted to welcome these new Board members, and we look forward to their contributions and learning from their previous experience at Kansas City Southern.”
CPKC said these four directors will also be nominated for election to the board of CPKC at its Annual General Meeting to be held June 15, 2023.